Tesla Wooed by California as New Jersey Weighs Sales Plan

California lawmakers offered Tesla Motors Inc. (TSLA) regulatory changes to accelerate a planned $5 billion battery “gigafactory” as New Jersey legislators filed a measure that would allow the company to resume electric car sales there.

The California bill, proposed yesterday by Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, and Senator Ted Gaines, a Republican from Roseville, calls for unspecified “changes to regulatory and environmental processes to expedite groundbreaking” for the plant, according to a statement.

Tesla, based in Palo Alto, California, announced plans for the sprawling battery plant in February to supply lower-cost lithium-ion cells for its cars and packs for home-power storage devices. Chief Executive Officer Elon Musk cited the time needed for California’s stringent environmental review as the reason the company didn’t initially consider the state. Musk in May said California was back on the list.

“Speed to execution has always been key to this project,” Diarmuid O’Connell, Tesla’s vice president of business development, said in a telephone interview. “Any effort which accelerates our ability to break ground and start to build this factory is a good thing.”

California Site

Tesla is looking at the former Mather Air Force Base near Sacramento, closed in 1993, among other California sites, according to Gaines and Mark Hedlund, a spokesman for Steinberg.

“It’s important to land the gigafactory in California where the innovation started,” Gaines said in an interview. “We ought to be in the business of creating middle-class jobs.”

Winning the plant that would eventually employ as many as 6,500 people would be a coup for California, which has lost manufacturing jobs to states with lower taxes and less regulation.

Tesla, California’s largest automotive employer, has said it’s studying sites in Arizona, Nevada, New Mexico and Texas, for the plant that it needs in operation by 2017.

Musk said this week Tesla will start work on as many as three potential sites for the factory and decide by year’s end which to build to completion, based on the speed of regulatory approval. Tesla wants the plant to achieve a 30 percent reduction in the cost of lithium-ion cells it uses for its electric vehicles. Panasonic Corp. (6752), currently Tesla’s main battery cell supplier, may also invest in the project, Musk has said.

Ban Repeal

In New Jersey, where a state commission banned Tesla from direct sales in April after lobbying by franchise car dealers, three lawmakers are offering a bill to let the company sell directly to consumers. If passed, Tesla could operate as many as four company stores, two more than they had before the ban.

Tesla’s “commitment to innovation, job-creation and customer satisfaction is precisely the kind of entrepreneurial spirit we should be encouraging,” said Lou Greenwald, a Voorhees Democrat and majority leader of the Assembly, said in a statement. “The Motor Vehicle Commission’s decision threatened to hamstring those efforts, but this bill fixes that wrong.”

Tesla rose 1.4 percent to $206.90 in New York. The shares have gained 38 percent this year.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Pete Young, Niamh Ring

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